The New Credit Union Difference: Our Best Defense Against Taxation
Denise Wymore, Chair, CU De Novo Collective
Throughout my 40+ years in the credit union industry, the topic of taxation has been a constant concern. Whether during annual planning, at league conferences, in the credit union trades, and now on social media, the threat of taxation has always loomed large. It's even a primary reason for the recent merger of our two national trade associations—to protect credit unions from the burden of taxation.
But how have we successfully kept this threat at bay? By telling the story of the Credit Union Difference. However, with the rise of large credit unions encroaching on the most profitable lines of business traditionally held by community and regional banks, as well as the recent increase in community bank purchases by credit unions, it’s becoming increasingly difficult to convince lawmakers that we truly are different. The bankers are becoming more vocal, and their threats more pointed.
The true definition of a differentiator - something your competition cannot and will not replicate. So, instead of merely talking about the Credit Union Difference, let’s actively demonstrate it. The essence of this difference? Cooperation.
While banks view each other as competitors, credit unions, for the most part, do not. When a new vendor wants to break into the credit union market, my advice is simple: sign on an "influencer" credit union early, let them experience the benefits and magic of your offering, and watch as they market it for you. That’s something banks don’t do—credit unions do. We even coined a phrase for this unique activity, coopetition.
By pooling resources through a CUSO, credit unions can access services at lower costs, maintaining their competitive edge without compromising their not-for-profit, member-focused mission. This reinforces the argument that credit unions are fundamentally different from for-profit banks, supporting their tax-exempt status. The CURQL fund is another prime example. Unlike banks, which prefer to go it alone, credit unions pool resources to invest in fintechs, ensuring that we stay competitive. Cooperation isn’t just a buzzword for us—it’s in our DNA.
Then there’s the pursuit of economies of scale—a goal often achieved through mergers. However, mergers run counter to the direction we should be taking as a movement. They mirror the behavior of community banks, which is not the Credit Union Difference we want to champion.
Instead, what if we collaborated to create Credit Union Shared Services that provide economies of scale for small credit unions, allowing them to remain independent rather than being forced to merge? Let’s take it a step further—what if we worked together to help start new credit unions by providing startup capital?
The last eight new credit union charters granted were all led by minority groups, a testament to our commitment to diversity and inclusion. When a new bank is started, it’s generally a group of wealthy individuals looking to grow their wealth. That’s not our way, and that’s the story we need to tell.
For more information on how you can help move the movement forward, go to www.cudenovocollective.org